Eventbrite’s share price has plummeted 17 per cent after it announced its plans to offer $115m of convertible senior notes that will be due in 2025.
In an SEC filing, the New York-listed online ticketing company also said it expects to grant those who initially purchase the notes the option to purchase an additional $17.25m in notes to cover any overallotments.
Eventbrite said it intends to use the proceeds partly for corporate purposes and partly to fund capped call transactions. These capped call transactions are intended to reduce dilution on conversion.
The company’s share price fell by almost a quarter around the time of the announcement, which came towards the end of the trading day on Tuesday. Despite the fall, Eventbrite’s share price has still almost doubled since hitting a low of $6.33 on May 15, and currently stands at $10.72. However, over the last year the value is down by 37 per cent.
The news comes as the firm reported yesterday that ticket sales in May 2020 were down 82 per cent year-on-year, but showed small signs of improving with paid ticket volume up 33 per cent.
In addition, Eventbrite’s advance pay out (APO) balance has been reduced by $26m since early May with creators funding approximately 98 per cent of advance payout refund volume to date, and stands at approximately $267m as of June 8.
Meanwhile, the firm confirmed it is the subject of a class action suit in California over its refund policy for cancelled and postponed events amid COVID-19.
The company, which said it intends to fight the suit “vigorously”, is accused of not paying refunds to customers who have been subject to COVID-19 related cancellations and indefinitely postponed events.
In the lawsuit, filed in the US district court for northern California, three ticketholders accused Evenbrite of “deceptive practices relating to its sale of live events tickets and its refusal to provide refunds for live events that have been cancelled, rescheduled and/or postponed.”
The three ticket buyers are seeking monetary damages, an order that Eventbrite will cease the “unlawful, deceptive, fraudulent and unfair business practices” alleged in the complaint, and legal costs, to be determined at a jury trial.
According to the plaintiffs: “Eventbrite has tried to shift responsibility to event organisers, allowing them to refuse refunds for cancellations, postponements and rescheduled events.”